SECURITIES AND EXCHANGE COMMISSION

Publishers of Tout Sheet Agree To Pay $325,000 in Penalties and Disgorgement

The Securities and Exchange Commission today announced the settlement with Michael St. John Hall, Kathleen Bradford Hall, and the Arrowhead Financial Group, Inc. ("Arrowhead"), publishers of the Arrowhead Financial Growth Newsletter ("Arrowhead Newsletter") from June 1996 to July 1997. The case involved the touting of the securities of small-cap companies in return for undisclosed compensation. Without admitting or denying the allegations of the complaint the defendants agreed to the entry of a permanent injunction enjoining them from future violations of the anti-touting and anti-fraud provisions of the federal securities laws. The defendants further agreed to pay a civil penalty of $305,000, to disgorge $15,000 in subscription fees, and to pay $5,000 in prejudgment interest.

The Complaint, filed in the United States District Court for the District of Colorado, alleges that the defendants mailed the Arrowhead Newsletter to as many as 60,000 investors a month. The newsletter touted the stocks of a total of 50 small-cap issuers who paid consideration in stock and cash for this service. Each of the 11 newsletters failed to disclose, or disclosed inadequately, that the Halls had received consideration in exchange for promoting the featured securities, under Section 17(b) of the Securities Act of 1933. Further, the complaint alleges that the Halls violated Section 10(b) of the Securities Exchange Act of 1934 by representing the Arrowhead Newsletter as an objective research report drafted by qualified analysts, when, in fact, the newsletter was simply a paid tout sheet.